Karma is a…well, you know

How Not to Launch a New Product

I live in a suburban area of the San Francisco Bay Area – close enough to work with most of my technology clients, but far enough away that my home feels removed from the mania that is Silicon Valley. It’s a good balance for me, but one of the drawbacks is that I have terrible internet service. I’m just out of reach of cable / DSL services, but well within wireless LTE connectivity. I use a local satellite provider that gives me fairly mediocre service (that’s another story), so I’m constantly on the lookout for a better option.

In researching alternatives, last week I ran across a company called Karma (http://www.yourkarma.com) that recently launched an unlimited “Neverstop” LTE service with the promise of 5Mbps connectivity and no data caps. “Hooray! My Internet woes have been solved!” was my reaction, and I immediately purchased a device and signed up for the service.

I got the device yesterday, hooked everything up, and immediately ran a speed test. To my dismay, I was capped out at roughly 1.5Mbps, well below the advertised 5Mbps rate. Disappointed but not discouraged, I sent an email to their customer service to see if there was some configuration issue that needed to be adjusted.

Today, I received an email from Karma titled “Help us improve Neverstop” with the following message:

“We launched Neverstop two months ago and the usage has blown our minds.

We couldn’t be more excited about your appetite to be online while on the go. But we were surprised to learn how many of you are also using it heavily at home.

…So, to make sure that Neverstop continues to work seamlessly for as many people as possible, we have to make some changes to the service. We began running tests to optimize the service, including lowering speeds. Our engineers are working hard to find the right balance of always accessible worry-free internet, at a fair price, so you’ll likely see speeds change over the next few days while we try to fine-tune that balance.”

As a customer, I’m clearly upset with what feels like a bait-and-switch offering, but as a consultant who makes my living advising companies on how to grow their businesses, it’s a classic case of poor product planning. While it’s a perfectly sound strategy to launch a service and get important information on how people plan to use it, you have to do it in a controlled, predictable way. With the Neverstop launch, Karma has now potentially alienated a large section of its potential customer base.

How could Karma have avoided this mess?

Market research.When launching a new product or even expanding your existing portfolio, it’s important to understand your target market and competitive landscape. Wireless companies have long done away with unlimited data plans because they aren’t profitable. People are hungry for bandwidth, and that appetite is only increasing. While it may not have been obvious that home users were a potential market, and Satellite providers were a potential competitor, a little investigation can turn up these crucial details.

Customer feedback.Karma has (I’m assuming) a stable customer base, and actively engaging those customers to discuss potential new offerings can yield a wealth of valuable data. Asking existing customers who were paying $14 per GB of data how they might use an unlimited service would pretty quickly reveal that there’s a tremendous appetite for unlimited LTE data to stream movies, play video games, etc., even if it’s capped at 5Mbps. That would have allowed Karma to fine tune the product and economics of the service before launch.

Launch a beta. Sometimes customers say one thing, but do another. If you’re unsure how your new product is going to be received and used, try it out with some customers. But for heaven’s sake, not all of them at once! A controlled offering to select users will give you the insights you need without alienating existing (and potentially future) customers with a botched launch.

There are other options as well, but you get the picture. A well-planned launch can mean the difference between a young company’s continued success, and complete disaster.

Ultimately, Karma is (re-)breaking ground here with unlimited wireless service, and 20/20 hindsight makes it easy to criticize. Having said that, speaking from a customer’s perspective I’m going to steer clear of them for the near future. Speaking from a consultant’s perspective, it reinforces why partnering with an organization that has deep experience in these types of activities can really mean the difference between success and failure.

But is it 20/20 hind site? There was plenty of data out there the rural markets were underserved, including a thriving market in grandfathered unlimited cellular data plans. And where we ended up, a data cap of 15 gigs is a far far cry from how never stop was being marketed.

My conspiracy theory are his investors needed to see a certain number of customers to release his next round of funding. This is actually quite common in the investment world.

Never stop and its massive promotion was designed to attract these new customers. Once the goal and funding was secured, the bait and switch occurred

I have been trying to understand karma from the POV of a business owner, but, their recent abrupt change isnt making sense to me in a variety of ways.

By capping at 15gb, they are saying that they didnt expect so many people to go over 15gb. And they are now saying that they did not think it would be so many people’s sole internet for either home or office.

Really? Their own customer service people were not on that page, nor their website copy, nor their advertisements. Apparently they were also marketing specifically to customers of something similar that just ended (it was called Clear?). I can understand why 1000gb might be a problem, but 15gb makes no sense.

And to make such a drastic product change without actually clearly telling their customers… Who now have to scramble for alternate solutions…

And then to refuse to come up with additonal more expensive plans to meet the demand that they found…

And to blame this all on customers without a really earnest aplogy…

Their only saving grace is offering refunds. If they were not, there would be much trouble.